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-- Posted Wednesday, 15 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -2.30, SILVER -6.50
London Gold Fix $544.30 +$2.80 LME COPPER STKS 106,375 ml tns +925 tons
COMEX GOLD stks 7.488 ml oz +13,342 COMEX SILVER stks 125.6 ml oz +115,448 oz OVERNIGHT ACTION: Chinese gold higher but early US action is somewhat softer. GOLD: The gold market managed an impressive bounce yesterday but might need to regain the $550 level in the April contract to actually turn the technicals positive. There were some reports of increased physical buying yesterday but the interest didn't appear to be dominating enough to completely throw off the recent liquidative tilt in the gold market. Fortunately, the gold market saw a much stronger than expected US retail sales report and a sharply higher US equity market run and yet the Dollar couldn't hold gains and that is a key development for gold. Therefore, the macro economic outlook improved in the action yesterday and that fosters expectations of increased physical demand and potentially inflation, both of which should lend support to gold prices. On the other hand, the short term technical condition of the charts remains partially bearish and with the Fed testimony today probably set to hint at additional rate hikes, it is possible that the bear camp manages to garner the upper hand off the testimony. In fact, it is possible that the Fed testimony gives the Dollar a temporary lift today and that could foster some light renewed profit taking in gold especially after the bounce yesterday. Trend line support currently comes in at $535.8 today and at $536.9 on Thursday. Near term liquidative potential today should be limited to $541.8 but a deeper slide could be in order if the Dollar is lifted aggressively by the dialogue today. SILVER: As in the gold market, we suspect that the impact of the Fed dialogue will be slightly negative to silver, as the Fed will probably make it clear they are set to battle inflation, even if the pattern of rate hikes is close to ending. While it is possible that the Fed dialogue will inspire a rally in silver, we see that outcome as less likely. On the other hand, we suspect that strength in the equity market and strength in the copper market is helping silver get beyond the recent liquidative tilt. In short, the low yesterday looks to be solid but in order for the market to quickly get beyond that vulnerability might require a further upgrade of the macro economic outlook. Near term critical support comes in at $9.25 but we can't rule out a temporary slide down to $9.125 in the event that the Dollar roars and the Fed is overtly hawkish today. It should now be safer to buy breaks in this market, especially if the equity market continues to throw off favorable vibes. METALS TECHNICAL OUTLOOK 2/15/2006 COMEX SILVER (MAR) 02/15/2006: The cross over and close above the 40-day moving average is an indication the longer-term trend has turned positive. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close under the 18-day moving average indicates the longer-term trend could be turning down. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside target is 909.7. The next area of resistance is around 940.8 and 946.6, while 1st support hits today at 922.3 and below there at 909.7. COMEX GOLD (APR) 02/15/2006: The major trend could be turning up with the close back above the 40-day moving average. Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market back below the 18-day moving average suggests the longer-term trend could be turning down. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is now at 539.7. The next area of resistance is around 552.9 and 555.7, while 1st support hits today at 544.9 and below there at 539.7.
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-- Posted Wednesday, 15 February 2006 | Digg This Article
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